Hospitality industry expects traction in occupancy and room rates in 2022: study


The country’s hotel industry which has been hardest hit by the COVID-19 pandemic is on the road to recovery with higher occupancy, rising average room rates (ARR) and increased mergers and acquisitions , according to a study released Wednesday.

Domestic leisure travel is driving the recovery, coupled with an increase in business travel, and most organizations gradually returning to a full or hybrid working model, he said.

In 2021, the occupancy rate was 42-45% and the average room rate was 4,300-4,600 rupees, which was higher than 2020 but 25-28% lower than 2019 levels, a he indicated.

We expect India-wide occupancy to improve to 66% in 2022, along with a 28% increase in ARR during the year. We expect occupancy and average room rates to return to pre-pandemic levels by the end of CY22 (calendar year) and by the middle of CY23, respectively, said the Chairman of HVS ANAROCK (South Asia) Mandeep Singh Lamba in the report.

The year 2022 has started on a difficult note with moderate demand in the first few weeks due to the increase in Omicron cases in the country and the accompanying travel constraints between states, according to the report of the hotel sector HVS ANAROCK.

However, that has been a temporary stumbling block, as domestic travel demand has been making a strong comeback since cases declined and travel restrictions were lifted.

Domestic leisure travel fueled the recovery throughout the year. Additionally, weddings and social events, as well as the resurgence of small and medium-sized domestic MICE events, have helped drive hotel demand in 2021, he said.

M&A deals in the hospitality sector are also expected to pick up speed during the year, with lenders going to the National Company Law Tribunal (NCLT) due to an increase in non-performing assets (NPAs) in the sector.

We anticipate greater business activity in 2022 and beyond. Due to the rapid recovery in domestic demand for leisure, interest in acquiring assets in the leisure markets will increase, especially as supply remains limited in this segment.

Investors are likely to prefer operational assets or a portfolio of assets to expand their footprint rather than greenfield or brownfield projects. Additionally, value deals where both the lender and the owner have taken haircuts are the most likely to find buyers, the report notes.

Debt rationalization will also be a key area of ​​focus for hotel owners and operating companies will review their debts and work to rationalize and reduce them, having learned the hard way during the pandemic, when companies with the largest debt servicing liabilities were hit the hardest. and fought for its survival, Anarock officials said.

However, amid a strong recovery, alternative accommodations like homestays or villa rentals will disrupt the hospitality industry, according to the report.

Alternative accommodations will grow exponentially as they have piqued the interest of travelers opting for smaller, more intimate venues for their getaways.

According to HVS Anarock, the brand is signed by 220 hotels for 17,500 rooms and the planned opening is scheduled for 8,800 keys of 120 hotels in 2022.

(Only the title and image of this report may have been edited by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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